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Low-wage countries' competition, reallocation across firms and the quality content of exports

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  • Julien Martin

    (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)

  • Isabelle Méjean

    (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique, Ecole Polytechnique - Ecole Polytechnique, CEPR - Center for Economic Policy Research - CEPR)

Abstract

What is the impact of low-wage countries' competition on the quality of high-wage countries' exports? To answer this question, we develop a new method that uses firm-level data to measure quality changes in sectoral exports. Over 1995-2005, we measure a 11% increase in the mean quality of France's aggregate exports, driven by a reallocation of demand in favor of higher quality producers. The phenomenon is significantly more pronounced in markets where the penetration of developing countries has increased while it is negative where firms face increased competitive pressures from high-wage countries. These results are consistent with within-product specialization along the vertical dimension. They suggest that, over the period, France has specialized in the production of higher quality goods. In our data, around one fifth of the measured quality improvement in France's aggregate exports is attributable to low-wage countries' competition. In turn, its increasing specialization in higher quality goods has limited France's market share loss over the period.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00962485.

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Date of creation: Jan 2011
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Handle: RePEc:hal:wpaper:halshs-00962485

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Keywords: Firm-Level Data ; Quality Heterogeneity ; Low-Wage Countries' Competition ; Within-product specialization;

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References

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Citations

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Cited by:
  1. Franco Amatori & Matteo Bugamelli & Andrea Colli, 2011. "Italian Firms in History: Size, Technology and Entrepreneurship," Quaderni di storia economica (Economic History Working Papers) 13, Bank of Italy, Economic Research and International Relations Area.
  2. Maria Bas & Vanessa Strauss-Kahn, 2013. "Input-Trade Liberalization, Export Prices and Quality Upgrading," Sciences Po Economics Discussion Papers 2013-13, Sciences Po Departement of Economics.
  3. Maria Bas & Vanessa Strauss-Kahn, 2013. "Input-Trade Liberalization, Export Prices and Quality Upgrading," Sciences Po publications 2013-13, Sciences Po.
  4. Gaulier, G. & Santoni, G. & Taglioni, D. & Zignago, S., 2013. "Market Shares in the Wake of the Global Crisis: the Quarterly Export Competitiveness Database," Working papers 472, Banque de France.
  5. Giorgia Giovannetti & Marco Sanfilippo, 2013. "China's Competition and the Export Price Strategies of Developed Countries," Working Papers - Economics wp2013_02.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  6. Julien Martin & Florian Mayneris, 2013. "High-End Variety Exporters Defying Distance : Micro Facts and Macroeconomic Implications," Working Papers hal-00959404, HAL.

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